144x Filetype PPTX File size 0.32 MB Source: www.uop.edu.pk
Capital Budgeting Capital Budgeting Techniques Techniques ProjProjeect Evaluatioct Evaluation ann and Selectd Selectiionon PoPotetenntial Diftial Difficficuultiltieess CaCappital ital RRatioationinningg ProjProjeect Moct Monitnitoringoring PoPosst-Complt-Compleetition on AudiAuditt 13-2 Project Evaluation: Project Evaluation: Alternative Methods Alternative Methods PayPaybbacack Perk Periiodod (PBP (PBP)) IInternternnaall Ra Rate ote of Ref Retuturrnn (I (IRRR)R) NeNet t PrePresesennt Vt Valualuee (N(NPV)PV) ProfiProfitatabbililityity InIndexdex (PI)(PI) 13-3 Proposed Project Data Proposed Project Data JJuulliie e MMiillllerer iis s eevvalaluuaattiinngg aa nneeww pprroojjecectt ffoorr hheerr ffiirrmm,, BBasaskekett WWoonnddeerrs s ((BBWW)).. SShhee hhaass ddeetteerrmmiinneedd tthhatat tthhee aafftteerr--ttaax x cacasshh fflloowwss ffoorr tthhee pprroojjeectct wwiillll bbe e $1$100,,000000;; $$1212,,000000;; $$1515,,000000;; $$110,0,00000;0; aanndd $7$7,,000000,, rreespspececttiivveellyy,, ffoorr eeacachh ooff tthhe e YYeeararss 11 tthhrroouugghh 55.. TThhee iinniittiiaall ccaashsh oouuttllaay y wwiillll bbe e $$440,0,000000.. 13-4 Independent Project For this project, assume that it is independent of any other potential projects that Basket Wonders may undertake. Independent -- A project whose acceptance (or rejection) does not prevent the acceptance of other projects under consideration. 13-5 Payback Period (PBP) Payback Period (PBP) 0 1 2 3 4 5 -40 K 10 K 12 K 15 K 10 K 7 K PBPBPP is this thee perperiiod od of tof timime e rrequequireiredd fo forr t thehe cumulativecumulative exexpectepectedd ca cash sh floflowsws frfroomm an an iinvenvestmestmennt projt projeect toct to equ equaall ththee ininitial itial ccasashh o outfloutfloww.. 13-6
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